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DCC Tech suffers a 'difficult year' due to tough trading conditions in the UK

DCC Technology sees huge drop in profits due to poor performance from UK arm Excertis

DCC Tech, the parent company of UK distributor Exertis admitted that 2015 was a ‘very difficult year’, as it released its figured for the FY2016.

Revenue climbed slightly to £2.44bn, however, that was about where the good news ended. Operating profit plummeted nearly 30% to £35.1m.

With 72% of revenue for the DCC Tech division coming through its UK business, Excertis and its parent company were significant blips on otherwise stellar report. Across the rest of the DCC Group, profits soared, with the energy division recording a 72% surge in operating profit to £205.2m, while its healthcare division reported a 13.5% rise to £45m; and the environmental business reported a rise of 14% to £15.2 million.

The firm said that the ‘UK business was adversely impacted by a reduction in sales of products from one large supplier’ and also by ‘weaker than anticipated demand for tablet computing, smartphone and gaming products.’

“These factors contributed to a like-for-like sales decline of 7%,”DCC said. “Although the business achieved growth in other areas such as audio visual and components, the change in product mix, together with the effects of negative operating leverage, contributed to a reduction in operating margin in the UK.”

Given the stellar performance in other areas of the business, shareholders won’t exactly be concerned about DCC Tech’s troubled year, but the firm said that action had been taken to counter the tough trading conditions in the UK.

“The business has reduced its cost base and is continuing to build its market position in new and developing product categories such as smart technology, audio visual, network security and virtual reality,” DCC said. “The capital infrastructure projects in progress will significantly enhance the IT and operational capability of the business, provide capacity for further growth and enable efficiency improvements. The projects remain on course for completion in the first half of 2017.”

 

 

 

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